Contract differentails in Corn futures and Sept vs July

A

aquarian1

I would like to discuss Corn futures trading with someone who has been tracking it/trading it for a while. In particular the contract variances that currently exist between May, July Sept and Dec.

They do not seem to be in line, either in direction or levels, far beyond the regular difference one would expect in index or metal futures.

Is the current disparity due to particularities of this season crops?

I am thinking of switching from May to Sept (skipping July), as I believe Gann did. What experiences have you had on the May roll-over?
 
I have all the data for CBOT corn going back to 1975.

Also have all the spreads for:

H vs. N
K vs. U
K vs. Z
N vs. Z
U vs. N
U vs. Z
For the same years, and..
Z vs. Z from 1995 forward.
 
Thank-you Stoic!

I am thinking of just trading a single contract at the moment (I am not well versed in spreads). I keep the data each day in a spreadsheet for the contract I am following.

The purpose of the spreadsheet is to try and estimate the high and low for the upcoming day. So I would have the 3 day average range, the change in midpoints, etc.

When I switch from one contract month to the next there is a jump/drop in the data. It seems May's volume is dropping off and I am trying to decide to switch from May to July or May to Sept.

On page 157 of "How to Make Profits in Commodities"
Gann writes:
"1937 May Final High 140. ...
.. Top was reached in the month of May, the month when most seasonal trend tops are made. You would sell September or December corn at this time when the prices of these options were high.

[he uses the word "options" were we now use the word "contracts"]

It seems he skips July.
There may be a very good reason for this.

I am new to trading corn, so I was thinking of staying with what Gann did. However, when I look at Sept it seems so very different to July.

What are your thoughts?

Thank-you.


Quote from stoic:

I have all the data for CBOT corn going back to 1975.

Also have all the spreads for:

H vs. N
K vs. U
K vs. Z
N vs. Z
U vs. N
U vs. Z
For the same years, and..
Z vs. Z from 1995 forward.
More...
 
Thank you for the spread chart.

I am not clear on how it answers my question about trading July or Sept. ?

attachment.php
 

Attachments

Quote from aquarian1:

Thank-you Stoic!

I am thinking of just trading a single contract at the moment (I am not well versed in spreads). I keep the data each day in a spreadsheet for the contract I am following.

The purpose of the spreadsheet is to try and estimate the high and low for the upcoming day. So I would have the 3 day average range, the change in midpoints, etc.

When I switch from one contract month to the next there is a jump/drop in the data. It seems May's volume is dropping off and I am trying to decide to switch from May to July or May to Sept.

On page 157 of "How to Make Profits in Commodities"
Gann writes:
"1937 May Final High 140. ...
.. Top was reached in the month of May, the month when most seasonal trend tops are made. You would sell September or December corn at this time when the prices of these options were high.

[he uses the word "options" were we now use the word "contracts"]

It seems he skips July.
There may be a very good reason for this.

I am new to trading corn, so I was thinking of staying with what Gann did. However, when I look at Sept it seems so very different to July.

What are your thoughts?

Thank-you.
More...
.



is this a joke?
 
Quote from aquarian1:

They do not seem to be in line, either in direction or levels, far beyond the regular difference one would expect in index or metal futures.

Is the current disparity due to particularities of this season crops?
More...

The disparity will vary from season to season. (see attached) So it's not just this season.

One can't compare the dissimilarity in the contract months in Corn to the general correlation one would see in the indices' or metals. The index and the metals deal with a more or less fixed product. Time, Fair value, market expectations, etc. No need to export the YM to China.

In different Corn contracts one may be dealing with Old crop vs. New Crop, World Supply and Demand, weather that can affect the planting, growing, and harvesting.

Today's DJ CBOT Corn Outlook is a good example:

CHICAGO (Dow Jones)-- U.S. corn futures are expected to open slightly lower Wednesday as a quick start to the planting season limits concern about this year's crop. Traders expect Chicago Board of Trade futures to open 1 to 3 cents lower. With U.S. corn planting already more-than-halfway done, widespread rains across the corn belt this week, which would typically be a source of anxiety at this time of year, are not a major concern. For those who have already planted, the rains, along with warm temperatures this week, are ideal for crop development, particularly in areas across the Midwest that have been relatively dry in recent months. Those who have yet to plant might miss out on the optimum planting dates, but still have plenty of time to get the crop in the ground without worrying about yield loss. Nearby corn supplies remain tight, which is why the May and July contracts are trading at a large premium to December. But the fast development of the new corn crop is producers confidence to start marketing their crops more aggressively, limiting the market's upside. The rapid planting pace has cooled off a market that soared last week on huge export sales, which most traders have assumed are to China. The U.S. Department of Agriculture reported more sales Wednesday, noting fresh export sales of 130,000 metric tons of corn for delivery to unknown destinations during the 2012/2013 marketing year.
 

Attachments

Quote from stoic:

The disparity will vary from season to season. (see attached) So it's not just this season.

Today's DJ CBOT Corn Outlook is a good example:

The rapid planting pace has cooled off a market that soared last week on huge export sales, which most traders have assumed are to China.
More...

Thank you Stoic. It was interesting looking at the 4 years you provided side-by-side.

You certainly seem to know your corn.


Do you usually trade the spreads?
If yes, have you found from your experience, that it is easier to trade the direction of a spread instead of the direction of a single contract?
Perhaps less risky?

Thanks again
 
Quote from aquarian1:

If yes, have you found from your experience, that it is easier to trade the direction of a spread instead of the direction of a single contract?
Perhaps less risky?

Thanks again
More...

Most of my trading is in daytrades. 99.9% of the time that I hold longer are in the spreads. Sometimes the spread has much lower margin requirements. Corn New crop vs. Old crop can be as low as $400.
What I look for are spreads that are way out of wack based od historical or seasonal. Sometimes the spread will show some action when the outright has no trend and a 1 cent move in the spread is 50 bucks per just as in the outright. Some may tout that spreads have lower risk, well... I think the lower margin well speak to that..theres still risk, another thing one can't place stops based on the spread. so there are pros and cons. I like it because most of the time I don't have to be right on the direction of the commodity, just right on the direction of the spread, and when things are way out of wack, they generally will move more to the mean.
 
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